HB 21-1327

  • Colorado House Bill
  • 2021 Regular Session
  • Introduced in House Jun 07, 2021
  • Passed House Jun 07, 2021
  • Passed Senate Jun 08, 2021
  • Signed by Governor Jun 23, 2021

State And Local Tax Parity Act For Businesses

Abstract

The 2017 federal "Tax Cuts and Jobs Act" placed a cap of $10,000 on the amount of state and local taxes paid that an individual can deduct on their federal taxes. This limitation did not apply to C corporations. Consequently, businesses organized as pass-through entities like S corporations and partnerships pay increased taxes on business profits compared to C corporations because pass-through entities pay taxes on business profits at the individual (partner or shareholder) level. For income tax years commencing on or after January 1, 2022, the bill allows pass-through entities to elect to pay their state income tax at the entity level so that the pass-through entity can claim an unlimited deduction at the federal level of state and local taxes paid ; except that the election is only allowed in an income tax year where there is a limitation on the deductions allowed to individuals under section 164 of the internal revenue code . While this reduces federal taxable income for the pass-through entity, it does not reduce Colorado taxable income because, under current law, the individual and the partnership are required to add back any state and local taxes deducted at the federal level. The bill adds an appropriation for the department of revenue to implement the taxpayer's election to pay their state income tax at the entity level. (Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.) (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

Bill Sponsors (4)

Votes


Jun 07, 2021

Jun 08, 2021

Actions


Jun 23, 2021

Office of the Governor

Governor Signed

Jun 22, 2021

Office of the Governor

Sent to the Governor

House

Signed by the Speaker of the House

Senate

Signed by the President of the Senate

Jun 08, 2021

Senate

Senate Third Reading Passed - No Amendments

Jun 07, 2021

Senate

Senate Second Reading Special Order - Passed - No Amendments

Senate

Senate Committee on Appropriations Refer Unamended - Consent Calendar to Senate Committee of the Whole

  • Committee-Passage
Appropriations

Senate

Senate Committee on State, Veterans, & Military Affairs Refer Unamended to Appropriations

  • Referral-Committee
Appropriations State, Veterans, & Military Affairs

Senate

Introduced In Senate - Assigned to State, Veterans, & Military Affairs

  • Introduction
State, Veterans, & Military Affairs

House

House Third Reading Passed - No Amendments

House

House Second Reading Passed with Amendments - Committee

Jun 04, 2021

House

House Committee on Appropriations Refer Amended to House Committee of the Whole

  • Committee-Passage
  • Referral-Committee
House Committee of the Whole Appropriations

Jun 03, 2021

House

House Committee on Finance Refer Unamended to Appropriations

  • Referral-Committee
Finance Appropriations

Jun 01, 2021

House

Introduced In House - Assigned to Finance

  • Introduction
Finance

Bill Text

Bill Text Versions Format
Signed Act (06/23/2021) PDF
Final Act (06/22/2021) PDF
Rerevised (06/08/2021) PDF
Revised (06/07/2021) PDF
Reengrossed (06/07/2021) PDF
Engrossed (06/04/2021) PDF
Introduced (06/01/2021) PDF
PA1 (06/04/2021) PDF
Committee Amendment PDF

Related Documents

Document Format
Fiscal Note SA1 (06/03/2021) PDF
Fiscal Note FN1 (06/02/2021) PDF
Fiscal Note FN2 (06/03/2021) PDF
Fiscal Note FN3 (07/23/2021) PDF

Sources

Data on Open States is updated periodically throughout the day from the official website of the Colorado General Assembly.

If you notice any inconsistencies with these official sources, feel free to file an issue.